Smart Grid Technology
Copyright 2020, Faulkner Information Services. All Rights Reserved.
Publication Date: 2003
Report Type: TUTORIAL
The US electric system, one of the supreme engineering achievements of the
20th century, is aging, inefficient, congested, vulnerable to attack (both
natural and manmade), and incapable of supporting or managing 21st century
energy requirements. Along with building out their power generation
infrastructure to provide increased capacity, the US electric industry needs to
infuse the system with "smart grid" technology such as expanding the use of
microprocessors to record and report information that will enable electric
providers and consumers to regulate and conserve costly electric resources.
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US Energy Information Administration (EIA) predicts that worldwide electric
power generation will nearly double by 2030. Unfortunately, the power generation
infrastructure is aging, inefficient, congested, vulnerable to attack
(both natural and manmade), and incapable of supporting – much less managing – 21st century energy requirements.
Today’s grid is also huge. As analyst Nick Davis reminds us,
"The grid uses
power plants of all kinds (e.g., nuclear, hydro, wind turbine, solar, coal, and
natural gas), transformers, substations, and more than 200,000 miles
of high-voltage transmission lines – that’s nearly the distance to the moon – and 5.5 million miles
of local distribution lines."1
The US Department of Energy says that, "Although the electric grid is considered an engineering marvel, we are
stretching its patchwork nature to its capacity."
Along with building out their power generation
infrastructure to provide increased capacity, the US electric industry needs
to infuse the system with "smart grid" technology, expanding, for
example, the use of microprocessors to record and report information relative to
electric utilization – information that will enable electric providers (and
consumers) to regulate and conserve costly electric resources.
The forces driving the demand for smart grid solutions are both simple and
- An ever-escalating population, more than seven billion worldwide.
An understandable feeling of entitlement among
peoples of developing nations who deserve – and demand – the same
plugged-in lifestyle enjoyed by Americans and other "westerners".
The gradual transition from an energy
infrastructure based on oil and national gas to one based on solar, wind,
and other renewable electric energy sources.
The need to save money. The Electric Power Research
Institute estimates that the implementation of smart grid technologies could
reduce electricity use by more than four percent by 2030. That would mean a
savings of $20.4 billion for businesses and consumers around the country.
- A phenomenon which Smart Grid News describes as "the electrification
of everything," including the first serious efforts to develop a
majority electric car fleet.2
According to the GridWise
Alliance, smart grid solutions, in the form of special hardware, software, and
telecommunications tools, offer the promise of:
peak demand by actively
managing consumer demand – The percentage of available appliances
and equipment that can respond to both consumer and utility operator
priorities continues to grow. The ability to manage power requirements in
both directions – to the utility as well as from the utility – will reduce
the need for power, especially during high-use periods like hot summer
afternoons when the cost of producing and delivering power is extremely
"[Balancing] consumer reliability and power
quality needs – Although some uses of electricity require near
perfect reliability and quality, others are almost insensitive to these
needs. A smart grid will be able to distinguish the difference and adjust
power reliability and quality accordingly at an appropriate cost.
"[Mining] energy efficiency opportunities
proactively – A smart grid will furnish consumers and utilities with
accurate, timely, and detailed information about energy use. Armed with this
information, [consumers and utilities] can identify ways to reduce energy consumption with no
impact on [their] safety, comfort, and security.
- "[Improving] overall operational
efficiency – A smart grid will become increasingly automated, and
smart sensors and controls will be integral to its design and operation. Utility operators will be able to easily identify, diagnose, and correct
problems, and will even have the capabilities to anticipate problems before
- "Seamlessly [integrating] all clean energy
technologies – Electric vehicles, roof-top solar systems, wind
farms, and storage devices will become a fundamental part of the grid. These
clean energy technologies will generate not only energy and power, but serve
many other vital functions as well."3
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The term "smart grid" generally refers to a class of enabling technologies that
are employed to deliver 21st century electrical service utilizing
computer-based remote control and automation.
Source: US Department of Energy
Today’s electrical grid is built on a 1950s
analog model in which electricity is generated at a central power plant and then
pushed over miles – or hundreds of miles – of transmission lines to waiting
customers, either businesses or consumers. This traditional grid model is
one-way, and allows for no two-way, or interactive, communications between
producers and end-users, with the effect that both parties lack the information
and the means to properly regulate electric usage.
With electricity becoming a more dominant energy
source, this "dumb" grid model is no longer tolerable, and a new smart
grid model is emerging. The smart grid consists of three basic
components, as illustrated in Figure 1:
- Smart devices
- Two-way communications
- Advanced software4
Figure 1. Smart Grid Model
Source: Smart Grid News
devices, such as meters, monitors, and intelligent electronic devices, gather
information about the flow and condition of power, and about the condition of
"The smart devices [then] transmit
the information over a two-way communications pathway.
software [then] processes the data and uses it to ‘ power’ applications. Some of those
applications help run the grid itself. Others handle billing, service, and other
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Department of Energy
The US Department of Energy is pursuing strategic partnerships to accelerate
investments in grid modernization, supporting groundbreaking research on synchrophasors, advanced grid modeling, and
energy storage – all key to a reliable, resilient, and long-lasting electricity
Personal Privacy Concerns
Any new form of data collection device or
system induces anxiety among personal privacy advocates, usually justified. Smart meters are no exception since by gathering data about individuals’electric use, utilities and other entities will be privy to customers’ personal
information. While privacy issues are unlikely to cause customers to
reject smart grid technology, smart grid providers may be compelled to launch
public relations campaigns to quiet any public unrest.
What Price Intelligence?
One of the principal concerns surrounding the smart grid movement is
security. Ironically, as the grid gets smarter, it also becomes more vulnerable,
as the technology itself provides an opportunity to "hack" the electrical system
in the same way that malicious actors attack the
nation’s e-commerce infrastructure.
To illustrate the danger, many security experts believe that the
Stuxnet worm, which was apparently designed to disrupt the industrial control
systems that regulated the operation of Iran’s nuclear enrichment facilities,
was developed and deployed by the US and Israeli governments. While perhaps
justified, this act of cyber warfare was nonetheless provocative.
As reported by analys Kennedy Maize, Pat Gelsinger, CEO of VMware, believes "The
biggest threat to security today is our hyper-focus on threats. Most innovations
have centered on finding and dealing with attacks. By contrast, very little has
been done in how we shrink the attack surface. That domain needs to be a topic
to achieve big gains in security.”
Gelsinger adds, “The most important security product won’t be a security
product in the future. It’s got to be built-in, not products outside the
system.” It will be necessary to “build more security systems into our
infrastructure, into the storage, into the network operations of our end-users,”
thus “simplifying – consistently reducing the attack surface.”6
In addition, smart grid developers and operators will be tasked with
protecting their infrastructure threats from electro-magnetic pulses (EMPs),
such as those produced when a nuclear device is detonated or the earth is
exposed to a severe solar-generated geomagnetic storm.
As analyst Jayshree Panfya observes, "As nations define and design smart
energy grids, it is vital to evaluate the security vulnerabilities and make the
grids resilient to both natural and artificial disasters." The first step is
determining who is in charge. In a query clearly aimed at national security
officials, Panfya asks pointedly, "Do you know who is responsible for power grid
security in your nation?"7
The Russians Are Here
As a sign of the geopolitical times, on March 15, 2018, a US Technical Alert was issued
warning about "Russian Government Cyber Activity Targeting Energy and Other
Critical Infrastructure Sectors."
A result of analytic efforts between the Department of Homeland Security
(DHS) and the Federal Bureau of Investigation (FBI), this alert provides
information on Russian government actions targeting US Government entities as
well as organizations in the energy, nuclear, commercial facilities, water,
aviation, and critical manufacturing sectors. The DHS and FBI produced this
alert to "educate network defenders to enhance their ability to identify and
reduce exposure to malicious activity."
This alert clearly – and urgently – applies to the smart grid industry.
Smart Grid Index
Singapore’s SP Group has created a powerful new statistical instrument for smart grid management: the world’s first smart grid index (SGI) for utilities.
According to analyst Sim Kwong Mian, the so-called "SGI framework
examines and uses seven key dimensions derived from
smart grid definitions, as defined by the European Commission and U.S.
Department of Energy." These dimensions are:
- "Monitoring and control
- "Data analytics
- "Supply reliability
- "[Distributed energy resources (DER)] integration
- "Green energy
- "Customer empowerment and satisfaction.
"The data can be analyzed and applied in asset
planning and renewal, network operation and maintenance to improve overall
operational efficiency. Moreover, certain real-time data, such as energy
consumption and tariff information, can empower customers to make informed
decisions that lower energy costs.
"The SGI is a tool for policy makers, utilities and
other companies that want to drive smart grid development. Updated annually, the
SGI benchmarking results – with utility rankings and best practices – [serve] to
encourage utilities to innovate and invest in developing smarter grids."8
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Smart Grid Market
According to MarketsandMarkets, the smart grid market will grow from
$20.83 billion in 2017 to $50.65 billion by 2022, at a compound annual growth
rate (CAGR) of 19.4 percent.
Driving the market expansion are:
- Government policies and legislative mandates.
- Regional government initiatives for smart meter roll-outs.
- Increasing demand for integration of renewable energy sources.
- The need for improved grid reliability.
- The need for efficient outage response.
From a technology perspective, expect the fastest growth rate in:
- Smart grid communication software, which facilitates the formation of mesh
networks. Mesh networks are instrumental in enabling intelligent features
such as substation automation, distribution automation, energy management,
real-time control, and self-healing.
- Smart grid sensors, which improve power management at the
transmission, distribution, and consumption levels, and play an important
role in the integration of power from distributed resources.
A few of the key vendors serving the smart grid market are:
- General Electric Company (New York, US)
- ABB Ltd. (Zurich, Switzerland)
- Siemens AG (Munich, Germany)
- Schneider Electric SA (Rueil-Malmaison, France)
- Cisco Systems, Inc. (California, US)
- IBM Corporation (New York, US)
- Oracle Corporation (California, US)9
Perhaps their most significant virtue, smart grids can reduce the pace of
climate change. According to the US Department of Energy, smart grids can
cut the electric power industry’s carbon emissions by a remarkable 25 percent.10
Drones: A New Smart Grid Technology
While "drone" technology is widely used by the US government for military
purposes, drones can also serve civilian needs, such as smart grid aerial
surveillance. February 2013 test flights, directed by the Electric Power
Research Institute (EPRI), demonstrated that prototype drones, or unmanned
aerial systems (UAS) could be deployed to assess damage to electric transmission
and distribution systems following storms.
Increasingly, smart grid technology is being viewed as a vehicle for economic
survival. As analyst Casey Novak observes, "Margins are getting
tighter in the utility business. To thrive as a business, utilities now must be
able to closely monitor, control, and project (in real time) what’s happening
with energy markets, generation, grid performance, consumption and demand
patterns, and assets. Smart grid technology can provide a wealth of data, and
analytics for meter data management and more are becoming an essential business
and operations tool."11
Most regional power grids are hardwired to route
electricity from big power plants to homes and businesses. This method of
operation is not only energy inefficient but renders large geographic areas
vulnerable to single points of generation failure. As an alternative,
smart grid technology is enabling the development of "microgrids". According to the Sierra Club, "A microgrid [actually, a small local smart
empowers a geographic area to use its own electricity when it’s available and to
rely on the existing utility grid when it’s not. If the big grid flickers, the microgrid can hum along in "island mode" and keep critical functions running. As
we enter an era of superstorms, that could mean fewer blackouts. And if those
local energy sources are renewable, it means a smaller carbon footprint."
Among their principal virtues, "Microgrids could make the power system more efficient (by preserving the
up to 15 percent of electricity that can be lost on long-distance
transmission lines and local feeders) and less polluting (by reducing
reliance on carbon dioxide-spewing power plants)."12
Building and Testing the Smart Grid
The US Department of Energy reminds us, somewhat soberly but
also optimistically, that "The Smart Grid will consist of millions of pieces and
parts – controls, computers, power lines, and new technologies
and equipment. It will take some time for all the
technologies to be perfected, equipment installed, and
systems tested before it comes fully on line. And it won’t
happen all at once – the Smart Grid is evolving, piece by
piece, over the next decade or so. Once mature, the Smart
Grid will likely bring the same kind of transformation that
the Internet has already brought to the way we live, work,
play, and learn."13
AI Is the Backbone
Analyst Sandra Ponce de Leon calls artificial intelligence (AI) "the
backbone of a true smart grid." Not surprisingly, "AI
will play the role of taking into account the millions of variables and
data points, including weather, demand, location, generation assets, etc
and proactively decide for every home where the power will come
from and how much it will cost. We don’t just need switches flipped
millions of times a second; we need decisions to be made. This is where
the power of AI comes in."
Josiah Nelson, Chairman and CEO of Trolysis, a renewable energy
company producing on-site, on-demand hydrogen power from aluminum and
"We’re baking in AI in nearly all
of our products. On a small scale, it helps route the aluminum fuel
between stacks in a system and adjusts based on environmental
factors to ensure constant flow of hydrogen, but as you scale up and
have 100 systems on a single site, we leverage AI to coordinate
between systems and ensure the total demanded output is balanced
effectively between each system and if there’s some sort of fault,
it can instantly be balanced between stacks within the individual
system or other systems on the site, meaning even if 25 percent of the
systems failed all at once, the remaining stacks will increase their
output to offset and the customer would never feel it.
"The simple fact is that AI adds huge value from both resiliency and
tremendous results from AI implementation in our technology, so one can
only imagine the impact it will have at grid-scale."14